XYZ Inc Owns 55% of DEF Inc

question 47

Multiple Choice

XYZ Inc. owns 55% of DEF Inc.'s 100,000 outstanding voting shares. Another company, GHI Inc., owns 40%, with the remaining shares being held by many individual investors. GHI Inc. also owns $25,000,000 worth of DEF Inc.'s $1,000 par value bonds, each of which is convertible to one voting share of DEF Inc. Which of the following statements regarding the control of DEF Inc. is correct?

• A) XYZ Inc. has control over DEF Inc. as it owns a majority of the latter's currently outstanding voting shares.
• B) XYZ Inc. does not have control over DEF Inc., as it cannot exercise control over DEF's strategic operating, investing and Financing activities without the cooperation of GHI Inc.
• C) XYZ Inc. has de facto control over DEF Inc.
• D)As long as GHI Inc. does not exercise its option to convert its bonds to voting shares, XYZ Inc. has control over DEF Inc.

Understand the role of wage flexibility and incentive plans in organizational productivity.

Compare American and Japanese lean production practices and decision-making processes.

Understand the role of unions in the transition to more flexible work models.

Assess the relationship between high performance work practices and company profitability.

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Definitions:

Surplus Of Labor

A situation where the supply of labor exceeds the demand for it, typically resulting in unemployment or lower wages.

Minimum Wage

The lowest remuneration that employers can legally pay their workers, intended to protect employees from unduly low pay.

Demand For Labor

The total amount of workers that employers are willing and able to hire at a given wage rate, in a given period.

Union Shop

A workplace where employees are not required to join the union in order to be hired but must join soon after they begin employment.